LaFontaine Accessories makes a variety of computer bags, carrier bags, and so on. LaFontaine uses activity-based costing for its products. The production manager has identified the following cost drivers and rates for overhead. The manufacturing facility at LaFontaine never has any workin-process at the end of the month.

Direct materials costs were $850,000 and direct labor costs were $835,000 during January, when the manufacturing facility made 750 inspections, had 36 setups, and ran the machines for 18,000 hours. 

Required

Use T-accounts to show the flow of materials, labor, and overhead costs from the four overhead activity centers through Work-in-Process Inventory and out to Finished Goods Inventory. Use the accounts Materials Inventory, Wages Payable, Work-in-Process Inventory, Finished Goods Inventory, and four overhead applied accounts.

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Activity Centers General support.. Materials handling. Machine setups Quality inspections Cost Drivers Number of machine-hours Direct materials cost Number of machine setups Number of inspections Rate per Cost Driver Unit $8 per machine-hour 8% of materials cost $4.600 per setup $86 per inspection